$8.2B Trib buyout gets nod from FCC chair

The proposed $8.2 billion buyout of the Tribune Co. could receive a regulatory green light as soon as Friday under a plan put forth by the head of the Federal Communications Commission.

JOHN DUNBAR

The proposed $8.2 billion buyout of the Tribune Co. could receive a regulatory green light as soon as Friday under a plan put forth by the head of the Federal Communications Commission.

FCC Chairman Kevin Martin said Wednesday he has circulated a plan to the other four members of the commission that would grant Tribune Co. waivers that would allow the company to own both a newspaper and a broadcast station in the same market until the commission votes on a permanent rule on such combinations.

Tribune Co., owner of the Los Angeles Times, the Chicago Tribune, nine other dailies and 23 television stations, is currently the subject of a buyout led by real estate investor Sam Zell that would take the company private.

Martin wants to vote on Dec. 18 on a permanent cross-ownership rule that would allow one company to own both a newspaper and a broadcast station in the same market. But Tribune has said that it needs 20 days following FCC approval to close the deal by year-end and a Dec. 18 decision would be too late and jeopardize financing for the deal.

Tribune currently owns both newspapers and broadcast stations in five markets: New York City, Chicago, Miami, Los Angeles and Hartford, Conn. Martin, anticipating that the ownership rules may be challenged in court, said the waivers will last six months after any potential litigation is concluded, or two years, whichever is later.

Martin said he did not think it would be fair to Tribune Co. to force the company to divest stations while the ownership issue was argued in court.

'We should give people an opportunity to see how that all shakes out and I would anticipate that would take quite some time,' he said.

Once the time limit expires, the company would have to come into compliance with whatever the commission approves as the final rule.

Tribune is allowed to own both a newspaper and broadcast property in Chicago because its ownership predates the FCC ban, which was passed in 1975. The company has operated in other markets under temporary waivers in anticipation that the FCC would lift the ban.

Martin's proposed permanent rule would eliminate the cross-ownership ban only in the largest 20 markets in the nation. Hartford, where Tribune Co. owns the Hartford Courant and a number of television stations, is the only market in question that falls outside of the top 20. Martin would not comment specifically on the Hartford situation Wednesday.

Democratic commissioners Michael Copps and Jonathan Adelstein had accused Martin of holding the Tribune Co. 'hostage' to 'force a vote on media ownership before the end of the year.' The two said they were prepared to vote on the Tribune waiver requests within three working days after Martin circulates a proposal.

Martin said he began circulating the proposal Tuesday, and said a vote could occur on Friday.

Tribune stock ended Wednesday's session up $2.75, or 10.1 percent, at $30 a share.
In a prepared statement, Tribune CEO Dennis FitzSimons said that if Martin's plan is approved, it will allow the transaction to close by the end of the year. 'This will allow Tribune's local media outlets to continue their commitment to outstanding journalism and service to our readers, viewers, listeners and advertisers.'

Jake Newman, an analyst for the research firm CreditSights, said the transaction looks far likelier to go through now. But he said the months-long wait has been costly to Tribune because of both the decline in the value of its assets and the likelihood that its lenders will charge higher interest rates.

'It's going to cost the company real money to the degree that interest rates will have to either to be higher or sales of assets lower,' he said. 'It's not an unvarnished victory by any means. They really would have rather gotten this done earlier.'

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AP Business Writer Dave Carpenter in Chicago contributed to this report.
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Tribune Co.: http://www.tribune.com

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